Cue the Clown Cars

Here's an op-ed I wrote for the NY Daily News on Wednesday, my final day as a US resident for a while. I'll be blogging from a dual London-NYC base for a while, with plenty of Africa, Middle East and Asia travel. For now, though, a look at the idiocy of my beloved nation's capital, Washington:

Tuesday, John Boehner — who last year took the country to the fiscal brink with a disastrous showdown over the debt limit — made clear that the Republicans plan to do it all over again this December .

That’s insane. The United States is three or four back-room conversations away from a political deal that would protect our economy for a generation.

Most economists understand this, even if they disagree on the details. The problem is that there may never have been another moment in our history when the country’s political leadership has failed so utterly to factor long-term consequences into its short-term calculations.

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The solution most economists understand to be necessary involves a mix of spending cuts and revenue measures, combined with a common-sense reduction in what government promises to deliver in medical services and payouts to baby boom retirees, who simply did not pay enough in payroll taxes to support the retirement benefits they were promised.

For an economy like ours, with the powerful benefit of issuing the world’s “reserve currency,” the mix we choose to employ to balance the current mess is unimportant.

What is important, if we are to stave off another credit downgrade and a serious challenge to the dollar in the medium term, is that we emphasize growth in the short term and agree publicly to a debt reduction plan in the medium term that will calm America’s creditors and loosen the reservoirs of corporate savings now being hoarded because of the uncertainty in Washington.

In a perfect world — or even in the old, imperfect one that existed before “No” became the motto of the Republican Party in 1994 — “elders” of our two political parties would have sat down long ago to hash out the compromise. The conversation might go something like this:

Republicans: “We’ll give you a slightly higher capital gains tax and allow some loopholes to close if you keep the Bush tax cuts and drop the Buffett Rule.”

Democrats: “Fine, but then we want a stimulus equal to 2% of GDP until unemployment is below 6.5%, and at that point we’ll agree to means-test Social Security, require higher worker contributions for Medicare and raise the retirement age to 68 for people born after 1970.”

This is how deals have been cut since the 1780s. But today, the GOP has no true “leader.” It is a party at war with itself.